Today, in the US, the Fed’s Beige book is due to be released
Market movers today
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Today, in the US, the Fed’s Beige book is due to be released.
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In the euro area today, the German industrial production figures for July are due to be released. German industrial production is especially important following the Brexit vote due to the size of the German manufacturing sector. The industrial production figures for June showed strength and we estimate July figures followed a similar trend and confirm the economic resilience.
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In the UK, focus today will be on the first hard post-Brexit data as industrial production for July is due out. We would also look out for the NIESR GDP estimate for August, as it is usually a good predicator of actual GDP growth. In addition, the Bank of England's Mark Carney, Jon Cunliffe, Kristin Forbes and Ian McCafferty are due to participate in a hearing of the Parliament’s Treasury Committee.
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Today, focus in Sweden will be on the Riksbank’s monetary policy decision (09:30 CEST), where our point estimate is for no change. In Norway, we estimate that industrial production for July, which is also due to be released today, climbed 1.5% m/m.
Selected market news
Yesterday, we saw a big drop in the ISM non-manufacturing index from 55.5 in July to 51.4 in August. The drop in the ISM non-manufacturing index is the biggest since November 2008 and the ISM non-manufacturing index is at the weakest level since 2010. Both the ISM non-manufacturing index and the Markit PMI services index gave a weak signal yesterday. On the back of the very weak ISM non-manufacturing index, 2Y and 10Y government bond yields in the US initially declined by approximately 5bp and 4bp, respectively, and closed the day around 7bp and 6bp lower than the level before the data release.
In general, it was a rather mixed session in global financial markets yesterday, slightly skewed towards risk-off sentiment. Stock markets were fairly calm and moved mainly sideways, whereas we saw a rally in fixed income markets. The 10Y government bond yield not only fell in the US but also in Germany and Japan by approximately 4bp and 1bp, respectively. Moreover, Brent oil decreased, though modestly, to USD47.35/bbl, and in FX markets the US dollar (USD) weakened sharply on the back of the weak August ISM non-manufacturing index.
Today has been another quiet morning. So far, it has been a rather mixed session in the Asian stock markets and regarding risk sentiment, it has been quite mixed as well with the 10Y government bond yield in Japan down by approximately 2bp at the time of writing and Brent oil climbing back to USD47.6/bbl.
Author
Danske Research Team
Danske Bank A/S
Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.
